I want to know what is the benefit to obtaining  a property under this type of mortgage vs. doing a traditional conventional mortgage and financing the renovations by other methods (ex: hard money or personal loan). 

When you are dealing with multi million dollar transactions, often the only credible security the lender can obtain for the loan is whatever business asset is used to secure the loan unless the debtors has significant assets. 

@Cathy MalmroseAll else aside, your son is essentially a landlord for this time and he could put together a lease agreement immediately (ideally with the help of an attorney), which outlines a security deposit in case of damages, requires the prior owner to obtain renters insurance, who pays utilities and any daily rent- especially a daily amount that’s high if they stay beyond a certain date.This would at least cover the primary points in a leaseback.I’m curious about when and how the sellers made the request to stay past closing that your son agreed to - was it just between the two parties or was the Realtor part of that conversation?

You can, however, pull a HELOC, cash-out refi, or obtain a home equity loan on your primary residence to use as a down payment on a non-owner-occupied investment in your area.

It's easy to obtain, costs very little, and doesn't require additional, on-going effort to maintain.

I agree with the prior comments that listing on the MLS will very likely pay back the 3% BAC or more by obtaining a higher offer.However, if you're committed to selling off market, you'll probably want to have the house marketed through a large and local wholesaler.  

Any advice or recommendations for a first time buyer of a condo used for rentals to obtain cash flow? 

The only reason it might not make sense is if you don't use it, because it does cost money to obtain it (about $2,500) and maintain it (another $1,500-$2,500/yr).

With all of that said, my question is whether it would be wise to forgo buying a property for now and essentially pay my way through school, OR invest part of my savings prior to starting my program, obtain a property, and carry out student loans for tuition and living expenses.

If you obtain a conventional loan and purchase a property in your name, you can then transfer it to an LLC.